SOURCE: BMO Private Bank

BMO Private Bank

February 20, 2014 09:00 ET

Affluent Californians Report They Need an Average of $2.5 Million for Retirement: BMO Private Bank Study

PALO ALTO, CA--(Marketwired - Feb 20, 2014) -

  • Ninety-five percent of California's affluent are confident in their ability to achieve their ideal retirement lifestyle
  • Wealth & the next generation: 86 percent feel their children are prepared to manage their inheritance
  • Fifty-two percent believe their children will be better off financially than they are

According to a study released today by BMO Private Bank, affluent Californians (those with investible assets of $1 million or more) reported that they require, on average, $2.5 million to fund their retirement. This is $200,000 more than the national average of $2.3 million. The study is the fourth in a series by BMO Private Bank examining trends among the affluent in the United States.

The study also found that 95 percent of California's high-net-worth individuals are feeling confident about their ability to achieve their ideal retirement lifestyle. This is in line with the national average among affluent Americans (94 percent).

"The increased confidence in our state shows that we take the goal of making plans to enjoy a dream retirement seriously and, given their confidence in their ability to achieve it, high-net-worth Californians are feeling positive about how their investments are performing," said Ron Gong, Managing Director, CTC Consulting | Harris myCFO, a part of BMO Financial Group.

Wealth and the Next Generation

The study also examined issues related to the inter-generational transfer of wealth. It found that, among the affluent California residents with children:

  • Forty-one percent of their wealth will be left to their kids.
  • Eighty-six percent feel that their children are well prepared to handle their inheritance.
  • Sixty-nine percent spend time talking to their kids about money management.
  • Fewer than a quarter (24 percent) feel their children will be worse off financially than they are.
  • Of those who feel that their kids will be worse off than they are, 75 percent feel it is because they will not be as successful in their professional lives.

"Wealth brings with it complexity, and teaching our children the importance of money management is critical to the family's financial health and security," said Mr. Gong. "With an increase of wealth transferring to the next generation, parents are doing the right thing by spending the necessary time having financial conversations with their children starting at a young age."

Key National Findings

High-net-worth Americans and Retirement:

  • Affluent Americans require, on average, $2.3 million to fund their retirement.
  • Almost all (94 percent) are feeling confident about their ability to achieve their ideal retirement lifestyle.

Wealth and the Next Generation:

  • The vast majority (85 percent) of high-net worth Americans feel their children are well-prepared to handle their inheritance. 
  • Affluent Americans will leave more than one-third (36 percent) of their wealth to their children.
  • Seventy percent spend time talking to their kids about money management and almost half (43 percent) feel that their offspring will be better off than they are.
  • Of the 35 percent who feel that their kids will be worse off than they are, 63 percent believe that this will largely be because of the future state of the economy.

About BMO Private Bank, a part of BMO Financial Group
BMO Private Bank offers a comprehensive range of wealth management services that include investment advisory, trust, banking and financial planning to meet the financial needs of high-net-worth clients. Through integrated teams of experienced financial professionals, BMO Private Bank helps its clients realize their financial and lifestyle goals with solutions that are custom tailored and delivered with the highest level of personalized service.

BMO Private Bank is a brand name used in the United States by BMO Harris Bank N.A. Member FDIC. Not all products and services are available in every state and/or location.

The online survey was conducted by Pollara between March 28th and April 11th, 2013 with a sample of 482 American adults who have $1M+ in investable assets. The margin of error for a probability sample of this size is ± 4.5%, 19 times out of 20.

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